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Wednesday, April 27, 2016

Driver Wages Down Under

Australia is moving away from pay-by-the-mile

Article thanks to Jim Mele and Links provided:

Feb, 2016 Trucking in Australia shares a lot in common with the U.S.  Like us, they favor conventional tractors over the cab-overs common to Europe and most other global markets. Like their American counterparts, they depend on trucks to haul the vast majority of their freight, and trucks haul that freight long distances.  But one thing we will no longer have in common with Australian trucking is pay-by-the mile (or in their case, kilometer).

An unusual tripartite group of government regulators, fleet operators and driver union representatives in Australia have devised a plan to replace pay-by-the-mile with hourly wages for long-haul and food services drivers.  Calling them “safety rates,” a bipartisan group of legislators have adopted the tribunal’s proposal, which will take effect in April. And apparently that’s just the first step. An Australian senator speaking at the annual meeting of the Transportation Research Board reported the panel is currently working to extend hourly pay for drivers to drayage, waste and fuel tanker fleets.

The motivation for this change is right there in its name—safety.  The head of the country’s transport workers union—and a member of the panel—claims that driving a truck in Australia is the most dangerous job in the country, 11 times more likely to result in a fatal accident than any other industrial job.  He argues that pay-by-the-mile creates incentives for drivers to engage in unsafe practices like continuing to drive while fatigued and using drugs to overcome that fatigue in order to make up for paying miles lost to congestion or loading delays.  Paying drivers hourly wages removes those incentives. What he says about safety makes sense to me, and now we’ll get some real-world experience to see that it really does have a positive effect.  But here in the U.S., I believe the potential impact would go much farther.

It’s the truckload portion of the industry that relies almost exclusively on pay-by-the-mile, and I don’t think it’s any coincidence that it’s truckload carriers that are struggling the most with the current shortage of reliable drivers.  Perceived fairness in wages is one of the most important elements in job satisfaction.  How fair does it seem to a driver when they’re the ones penalized by a shipper’s loading delay, or by congestion or bad weather? How fair does it seem when all the financial pressure is on the driver to make up for those delays?

Of course the immediate objection is that moving to hourly pay for drivers would cost too much.  But what is it costing fleets in unseated trucks and liability exposure not to make that switch?
Yes, it will raise driver wages, but fleets shouldn’t be the only ones to bear that cost. The shipping community needs to understand the real cost of its inefficiencies, costs that it now ignores because they are shifted onto the driver.  It’s too early to know if Australian carriers will see any improvement there, but one of the TRB speakers said loading delays were reduced from seven hours to 23 minutes when one port made the switch to hourly pay for drivers. That seems like an extreme example, but any substantial improvement in supply chain productivity would benefit all—drivers, fleets and shippers alike.

Pay-by-the-mile isn’t going to go away overnight in this country, but I believe hourly pay for drivers is inevitable.  Safety, access to labor and basic fairness make it so.  Now is the time for carriers to figure out how they can make that transition without undue disruption to their businesses.

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